Business

Far from being the rational decision-makers described in economic theory, Thaler found, people often make decisions that don't serve their best interests.

By PAUL WISEMAN and JIM HEINTZAssociated Press

WASHINGTON — People make poor economic choices. They don't save enough for retirement. They refuse to cut their losses on plummeting investments because they won't own up to mistakes. They buy houses and stocks when prices are high, thinking that what's going up today will keep going up tomorrow.

Richard Thaler of the University of Chicago Booth School of Business on Monday won the Nobel economics prize for documenting the way people's behavior doesn't conform to economic models that portray them as perfectly rational. As one of the founders of behavioral economics, he has helped change the way economists look at the world.